am i insane for considering this? 820k mortgage on a 240k income
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Anonymous
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We make $220k and have a monthly PITI payment of $3,600. It sucks.
What would be your monthly PITI payment on this house? |
Anonymous
| I think technically you can afford it, but I think you will be sorta stressed thinking about money. |
Anonymous
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Eh, we did 800K (1M house with 20% down) on 250K/HHI. Not even an issue financially, we are able to save, pay for daycare, and travel. So we owe money on 3.2x of gross.
I mean we don't need a car (walk/bike/metro) and employers are super generous with retirement matching, so maybe that gave us the leeway? We're 3 years into this now and are feeling pretty good about our choices. Current PITI is 3500. |
Anonymous
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So PITI of about 3600/mo or 43K/yearly? Or 18% of gross income?
Doesn't seem to be a problem. PITI to income is the only ratio that matters. i.e. interest rates matter! Interest+Payments on $820K principal today at 30years/2.5% is $2,963/mo. The same payment on 30year/6.5% - which is what is was in 2008 - would correspond to a $475K loan. If they had said they were getting a 475K mortgage on a 240 income, nobody would bat an eye. |
Anonymous
What does your budget look like for vacation, gifts, and children activity! |
Anonymous
| It’s fine |
Anonymous
| I did 620k on $150k and it was fine. Different situation because that was sole income (no daycare) and I expected to start earning more and now do, but this is doable depending on your other expenses and your goals. |
Anonymous
It's a first house, jumbo loan, less than 20% down, for people who are feds (no doctor/law firm special rates). They're not getting 2.5%. They should budget it to something closer to 3600 for PI alone, and depending on where the house is it could be another 600-900/month for property tax, and they're either getting a higher rate up front or adding PMI for the fact they only have 16% to put down. You showed your math and your math was bad. |
Anonymous
| What about emergency funds, college tuition, retirement savings, vacations, preparing for sandwich years? Can you afford a layoff/furlough, medical diagnosis, if your parents have dementia/healthcare needs? If your car is totaled tomorrow, how will you swing it? |
Anonymous
| We did a 600k mortgage when we were making about that much and it was a bit of a stretch with two in daycare. |
Anonymous
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I wouldn’t do it. One fed family, current HHI is $240k. Growth trajectory to about $280k over the long term and not much beyond. PITI is $1800 and we can largely do whatever we want even with two daycare payments.
We will consider a home of $750-800k of/when we move but nothing more. Simply not interested in being house poor and living on a tight budget. Love being able to buy whatever I want, travel, and save considerably for early retirement. |
Anonymous
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It is totally fine.
3.4x is easy. Don't listen to the overly conservative idiots on this subforum. If it were up to them people would only be living in 2x income homes....many people in this area would not have homes. The 2.5-3x rule was written back when interest rates were 10%. It is also different when you live in a HCOL area. It just costs more to live. |
Anonymous
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I am pretty aggressive with my housing costs and this is a lot even for me. We have about the same income, give or take, and a $670k mortgage. We bought 6 years ago, and by the time we bought, our kids were in HS/MS, so no child care costs and my son’s college is as funded. I think our current mortgage is good, but could not imagine $150k more. FWIW, this is our current breakdown:
$13k net after 2 401ks at max (we also have a pension worth $100k in future dollars) $3900 mortgage $3600 cc (anything and everything not otherwise listed is charge to the cc) $1200 cash savings (home repair, vacation) $1200 taxable account $1000 IRA $120 car insurance $20 umbrella insurance $55 life insurance $170 electric $90 water and sewer $80 gas $1200 529 $155 phone |
Anonymous
| It's OK if you're thrifty, but you know things may be pretty tight. I think this price range makes the most sense if it allows you to get something that you could see staying in for, say, 15-20 years, whereas a lower price range you'd see as more of a starter home. If so, the saved transactions costs may be considerable, and could push a reasonable person towards your proposed price range. |
Anonymous
| You need a bigger downpayment, in my opinion. When married, made 280, bought 850 but put down 225. |